Small Company Held Vicariously Liable for Acts of Its Managing Director at Late Night Drinking Session after Work Christmas Party

In Bellman v Northampton Recruitment Limited [2018] EWCA Civ 2214 the Court of Appeal has found that a company is vicariously liable for the violent assault by its Managing Director, committed at an unplanned after-party following a work Christmas party, and at a different location to the pre-arranged work event. The decision, which was handed down on 11 October 2018, overturns that of Cotter J in the High Court[1].

The facts

Cotter J at first instance concluded that Mr Major, the Managing Director of the Defendant company, Northampton Recruitment Ltd, had assaulted Mr Bellman, an employee of the Defendant, at around 3am at a drinking event in a hotel lobby after an ordinary work Christmas party; the unprovoked assault happened when Mr Major lost his temper during a conversation about the management of the company. Mr Bellman suffered traumatic brain injury as a result. I set out the facts in some detail because they are central to the decision:

The Defendant, Northampton Recruitment Limited, was a small company which ran franchise offices for a national HGV drivers’ agency: it is described as running “a round-the-clock driving operation”. Mr Major was its managing director and was the directing mind of the company. He saw himself as being in overall charge of all aspects of its undertaking and saw the maintenance of managerial authority as a central part of his role[2].

On 16 December 2011 the Defendant held a Christmas party for its office staff and their partners. 24 people attended, of which 10 were office staff. Mr Major saw it as part of his job to oversee the smooth running of this party. He arranged for the Defendant to pay for the food and drink at the party, and for taxis and accommodation for most of the guests at the nearby Hilton Hotel.

At around midnight, Mr Major paid for taxis to take those who wanted to the Hilton Hotel for further drinks: around 13-15 of the original 24 attendees, of which 5 or 6 were office staff. This was not a pre-planned extension of the Christmas party. On arriving at the hotel, most of the group continued to buy drinks – the majority of which the Defendant paid for – and to discuss a variety of topics.

From 2am the conversation was focussed on the Defendant’s business. At around 2.45am a group of 6 people, including Mr Major and Mr Bellman, went outside. Mr Bellman mentioned Mr Steven Kelly, a new employee at the Defendant. Mr Kelly had previously been the subject of conversation in the office, and it was understood that he was paid significantly more than anyone else. Mr Major became annoyed at being questioned about this, and conspicuously returned to the hotel lobby. He then summoned the remaining company employees and began to lecture them, along the lines that he owned the company, the decisions were his to take, and he paid their wages.

By this point Mr Major was swearing and saying that Mr Kelly was in the right place. Mr Bellman challenged this, saying that he thought Mr Kelly would be better based at Nuneaton. Mr Major moved towards Mr Bellman and said, “I f***ing make the decisions in this company it's my business. If I want him based in Northampton he will be f***ing based there.” He then punched Mr Bellman twice, twice knocking him to the ground. Mr Bellman suffered a traumatic brain injury, was a protected party in the litigation and lacks the capacity to manage his own affairs.

The Court of Appeal’s decision

The Court of Appeal (Asplin LJ, Moylan LJ, Irwin LJ) held unanimously that there was a sufficient connection between the wrongdoer’s employment position and his wrongful act to make it just for the employer to be held liable, overturning the decision at first instance. The analysis of the recent Supreme Court decision in Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11; [2016] A.C. 677 was applied.

Taking the first stage of the analysis, Mr Major’s field of activities was wide. As above, he was the directing mind of the Defendant company and had overall charge of all aspects of the business. He did not have set hours and viewed the maintenance of his managerial authority as a central part of his role.

The submission that the yardstick of actual authority should be used to limit the “field of activities” was rejected: following Mohamud v Morrisons one should consider the field of activities assigned to the wrongdoer in a broad sense and look at the matter objectively, taking account of the position in which the employer has placed the wrongdoer.

Secondly, there was a sufficient connection between Mr Major’s field of activities and the assault at 3am. Despite the time and place, the drinking session should be seen against the background of the evening’s events – namely the work Christmas party, paid for and arranged by Mr Major on behalf of the Defendant. Furthermore, Mr Major was purporting to act as the managing director of the Defendant, as he sought to exercise authority over his subordinate employees. Even if he had “taken off his managerial hat when he first arrived at the hotel”, he chose to return to this role and reassert his authority when his managerial decisions were challenged.

It appears that the Court of Appeal placed weight on the fact that Mr Major had a wide remit as managing director, and that he saw the maintenance of managerial authority as a central part of his role. Furthermore, the assault took place during a conversation in which Mr Major sought to exercise managerial authority over his employees, and moments after he asserted that he had the authority to take a particular management decision.

It remains to be seen whether the Respondent will appeal.

Discussion

At first blush this decision extends the ratio of Mohamud v Morrisons to cases in which one employee attacks another employee in connection with a discussion about work. Relevant facts in this analysis are that the incident happened at around 3am at a voluntary and unplanned drinks session after a work event, at which attendees were free to leave, that various topics were discussed, but the conversation ultimately turned to work.

On closer analysis, I consider that the decision is not a significant extension of the ratio of Mohamud v Morrisons but that it comes down to the unusual facts of this case. The assaults were carried out by a managing director with a wide remit against another employee after he had challenged a management decision. In spite of the time and place of the assaults, he was, in the context, purporting to act as a managing director and seeking to reassert his authority.

The Court of Appeal spells out that vicarious liability would not ordinarily apply in the event of an argument about work matters between colleagues at a social event. Cotter J’s analogy of the situation to 2 work colleagues playing a social round of golf, turning to discuss work, and then the senior employee assaulting the junior employee is rejected[3]. Crucially, those attending the drinks session after the Christmas party had done so qua staff and managing director, and not as equal participants: the decision at [28].

Furthermore, the decision makes very clear that the finding of vicarious liability arose from the unusual circumstances in this case. Irwin LJ, with whom Moylan LJ agreed, states at [40]:

“I do emphasise that this combination of circumstances will arise very rarely. Liability will not arise merely because there is an argument about work matters between colleagues, which leads to an assault, even when one colleague is markedly more senior than another. This case is emphatically not authority for the proposition that employers became insurers for violent or other tortious acts by their employees.”

Practical implications

After this decision, should employers be more concerned about the consequences of a ruckus at the work Christmas party? On balance, no.

This judgment certainly does not mean that an employer would ordinarily be vicariously liable for fights between colleagues at work social events, or at drinking sessions loosely connected to such events. Nor would an employer be vicariously liable if the fight arose from an argument about work matters.

The situation in which this decision will apply is likely to be limited to:

An assault committed by a senior employee with management responsibility;

Who was seen to represent the company – for example, in a small company;

In the course of a discussion with colleagues in which he sought to invoke his managerial authority.

In Bellman v Northampton Recruitment Limited [2018] EWCA Civ 2214 the Court of Appeal has found that a company is vicariously liable for the violent assault by its Managing Director, committed at an unplanned after-party following a work Christmas party, and at a different location to the pre-arranged work event. The decision, which was handed down on 11 October 2018, overturns that of Cotter J in the High Court[1].

The facts

Cotter J at first instance concluded that Mr Major, the Managing Director of the Defendant company, Northampton Recruitment Ltd, had assaulted Mr Bellman, an employee of the Defendant, at around 3am at a drinking event in a hotel lobby after an ordinary work Christmas party; the unprovoked assault happened when Mr Major lost his temper during a conversation about the management of the company. Mr Bellman suffered traumatic brain injury as a result. I set out the facts in some detail because they are central to the decision:

The Defendant, Northampton Recruitment Limited, was a small company which ran franchise offices for a national HGV drivers’ agency: it is described as running “a round-the-clock driving operation”. Mr Major was its managing director and was the directing mind of the company. He saw himself as being in overall charge of all aspects of its undertaking and saw the maintenance of managerial authority as a central part of his role[2].

On 16 December 2011 the Defendant held a Christmas party for its office staff and their partners. 24 people attended, of which 10 were office staff. Mr Major saw it as part of his job to oversee the smooth running of this party. He arranged for the Defendant to pay for the food and drink at the party, and for taxis and accommodation for most of the guests at the nearby Hilton Hotel.

At around midnight, Mr Major paid for taxis to take those who wanted to the Hilton Hotel for further drinks: around 13-15 of the original 24 attendees, of which 5 or 6 were office staff. This was not a pre-planned extension of the Christmas party. On arriving at the hotel, most of the group continued to buy drinks – the majority of which the Defendant paid for – and to discuss a variety of topics.

From 2am the conversation was focussed on the Defendant’s business. At around 2.45am a group of 6 people, including Mr Major and Mr Bellman, went outside. Mr Bellman mentioned Mr Steven Kelly, a new employee at the Defendant. Mr Kelly had previously been the subject of conversation in the office, and it was understood that he was paid significantly more than anyone else. Mr Major became annoyed at being questioned about this, and conspicuously returned to the hotel lobby. He then summoned the remaining company employees and began to lecture them, along the lines that he owned the company, the decisions were his to take, and he paid their wages.

By this point Mr Major was swearing and saying that Mr Kelly was in the right place. Mr Bellman challenged this, saying that he thought Mr Kelly would be better based at Nuneaton. Mr Major moved towards Mr Bellman and said, “I f***ing make the decisions in this company it's my business. If I want him based in Northampton he will be f***ing based there.” He then punched Mr Bellman twice, twice knocking him to the ground. Mr Bellman suffered a traumatic brain injury, was a protected party in the litigation and lacks the capacity to manage his own affairs.

The Court of Appeal’s decision

The Court of Appeal (Asplin LJ, Moylan LJ, Irwin LJ) held unanimously that there was a sufficient connection between the wrongdoer’s employment position and his wrongful act to make it just for the employer to be held liable, overturning the decision at first instance. The analysis of the recent Supreme Court decision in Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11; [2016] A.C. 677 was applied.

Taking the first stage of the analysis, Mr Major’s field of activities was wide. As above, he was the directing mind of the Defendant company and had overall charge of all aspects of the business. He did not have set hours and viewed the maintenance of his managerial authority as a central part of his role.

The submission that the yardstick of actual authority should be used to limit the “field of activities” was rejected: following Mohamud v Morrisons one should consider the field of activities assigned to the wrongdoer in a broad sense and look at the matter objectively, taking account of the position in which the employer has placed the wrongdoer.

Secondly, there was a sufficient connection between Mr Major’s field of activities and the assault at 3am. Despite the time and place, the drinking session should be seen against the background of the evening’s events – namely the work Christmas party, paid for and arranged by Mr Major on behalf of the Defendant. Furthermore, Mr Major was purporting to act as the managing director of the Defendant, as he sought to exercise authority over his subordinate employees. Even if he had “taken off his managerial hat when he first arrived at the hotel”, he chose to return to this role and reassert his authority when his managerial decisions were challenged.

It appears that the Court of Appeal placed weight on the fact that Mr Major had a wide remit as managing director, and that he saw the maintenance of managerial authority as a central part of his role. Furthermore, the assault took place during a conversation in which Mr Major sought to exercise managerial authority over his employees, and moments after he asserted that he had the authority to take a particular management decision.

It remains to be seen whether the Respondent will appeal.

Discussion

At first blush this decision extends the ratio of Mohamud v Morrisons to cases in which one employee attacks another employee in connection with a discussion about work. Relevant facts in this analysis are that the incident happened at around 3am at a voluntary and unplanned drinks session after a work event, at which attendees were free to leave, that various topics were discussed, but the conversation ultimately turned to work.

On closer analysis, I consider that the decision is not a significant extension of the ratio of Mohamud v Morrisons but that it comes down to the unusual facts of this case. The assaults were carried out by a managing director with a wide remit against another employee after he had challenged a management decision. In spite of the time and place of the assaults, he was, in the context, purporting to act as a managing director and seeking to reassert his authority.

The Court of Appeal spells out that vicarious liability would not ordinarily apply in the event of an argument about work matters between colleagues at a social event. Cotter J’s analogy of the situation to 2 work colleagues playing a social round of golf, turning to discuss work, and then the senior employee assaulting the junior employee is rejected[3]. Crucially, those attending the drinks session after the Christmas party had done so qua staff and managing director, and not as equal participants: the decision at [28].

Furthermore, the decision makes very clear that the finding of vicarious liability arose from the unusual circumstances in this case. Irwin LJ, with whom Moylan LJ agreed, states at [40]:

“I do emphasise that this combination of circumstances will arise very rarely. Liability will not arise merely because there is an argument about work matters between colleagues, which leads to an assault, even when one colleague is markedly more senior than another. This case is emphatically not authority for the proposition that employers became insurers for violent or other tortious acts by their employees.”

Practical implications

After this decision, should employers be more concerned about the consequences of a ruckus at the work Christmas party? On balance, no.

This judgment certainly does not mean that an employer would ordinarily be vicariously liable for fights between colleagues at work social events, or at drinking sessions loosely connected to such events. Nor would an employer be vicariously liable if the fight arose from an argument about work matters.

The situation in which this decision will apply is likely to be limited to:

An assault committed by a senior employee with management responsibility;

Who was seen to represent the company – for example, in a small company;

In the course of a discussion with colleagues in which he sought to invoke his managerial authority.